[Chicago skyline. From pixabay.com via NOAA]
When weather events happen, economic repercussions usually follow. Consumer behavior as well as supply and demand for a product or raw material can be affected. Energy demand soars during heatwaves; insurance claims rise after hailstorms; snow slows in-store shopping but can increase online sales; and grain prices spike during drought. Understanding how those impacts affect the U.S. economy has spurred a growing demand for analysis of weather and climate data.
Today, more than 250 weather service providers support businesses with information that helps answer how weather and climate affect economic outcomes. For many parts of the U.S. economy, decision support providers tailor applications to weather-related questions based on a wide range of needs.
By combining data with business-specific information, weather vendors are taking the guesswork out of potential market changes
. Many businesses use services on a regular basis to study consumer behavior, logistics, weather patterns, and much more. Economic sectors include energy producers, retailers, seasonal maintenance crews, transportation, law firms, and insurance companies.
An increasing number of companies are faced with the need to adapt their business models based on weather volatility. Weather alone can cause the gross domestic product (GDP) to fluctuate 3 to 6 percent a year, or as much as $1.3 trillion, based on a National Weather Service analysis
. Demand for value-added weather services is projected to grow by 10–15 percent a year, according to a new study
. That illustrates the important uses of data and the continued need for weather information.
Weather and Climate Data Lay the Foundation
There is a wealth of environmental data
used in product and service development. For instance:
- Energy traders develop consumer-demand forecasts when weather is expected to impact a region
- Insurance companies apply forensic analysis to weather-related accidents and claims
- Transportation providers determine where to build facilities so that fog, snow, or other weather factors pose fewer challenges to logistics
- Retailers analyze how seasonal patterns can affect merchandising and operations
The private weather service industry, currently valued at $7 billion, creates customized products such as maps, charts, graphics, and reports, or software tools and dashboards based on user specifications. Providers often accompany products with consultation services. With NOAA data, tailored services are poised for continued growth
Edited for WeatherNation by Meteorologist Mace Michaels